News

Macau-based casino operator SJM Holdings still has 2,150 excess staff after the closure of five satellite casinos under its license. This has resulted in a cost of around HK9 million (US.6 million) in redundant payroll for the company. The staffing situation was disclosed during SJM’s earnings call for the second quarter of 2023. The company reported an Adjusted EBITDA loss of HK3 million (HK million) from the remaining satellite casinos, which is similar to the loss reported in the first quarter.

The satellite casinos that are still operational include Casa Real, Landmark, Emperor Palace, Fortuna, Grandview, Kam Pek Paradise, L’Arc, Legend Palace, and Ponte 16. The closures of Babylon, Diamond, Golden Dragon, Million Dragon, and Royal Dragon in 2022 were due to changes in Macau’s gaming law regarding satellite casinos.

The Macau government has mandated that concessionaires must employ former casino dealers from closed satellite casinos. However, the pace of staff reduction for SJM has been slower than expected. The company aims to fully rationalize its workforce by the end of 2025.

SJM’s Cotai integrated resort, Grand Lisboa Palace, is expected to absorb some of the excess staff. The company plans to complete the training of staff members by the end of this year to bring the resort’s total hotel rooms to 1,892.

Despite this, SJM has higher operating expenses compared to pre-COVID levels. The opening of Grand Lisboa Palace and the excess staff are contributing factors. In order to achieve a similar level of profit recovery as its peers, SJM would need to ramp up Grand Lisboa Palace faster.

SJM management expects the market share of Grand Lisboa Palace to increase over time, with potential growth from 2% to between 3% and 3.5%. However, there are some issues that need to be addressed, such as the government cleaning up the area surrounding the resort, improving connectivity to the Cotai Strip, providing more F&B offerings, and increasing hotel occupancy.

In addition, SJM plans to renovate its peninsula property, Grand Lisboa, by focusing on rooms and introducing more casual restaurants for mass and retail areas. The renovation project is expected to start in 2024 and be completed by 2026.

The post Macau’s SJM Holdings Carrying Excess Staff after Closure of Satellite Casinos appeared first on ISP Today.